Oh, you mean the code you posted inside your comment above? That would belong in your functions.php file (usually), but you also need code in your header.php file to actually load the header. The code you posted simply tells WordPress that your theme supports custom headers, it doesn't actually display the header.

It looks like you have your image in a div of class "span3" which has a width set of 270px or 220px depending on the screen size. Due to the width of the container being restricted, this is forcing the size of the image to be reduced to maintain the aspect ratio.

Maybe put the image in a new div of say class "header__image" or add another class to the div to contain the image?